Sany Heavy Industry Co., Ltd. (600031): The growth rate of digging is much faster than the industry’s heavy repurchase, which shows development confidence
Event 1: In April, Sany Heavy Industry sold 6,734 units, + 10% each time; of which 892 units were sold in large excavations, + 44% each time, and 2300 units were sold in mid-digs, +5 each time.
7%, small excavation sales of 3542, +5 in ten years.
Event 2: The company will convene a shareholders’ meeting on May 24, and proceed according to the “Preliminary Plan on Repurchasing Shares by Concentrated Bidding Transaction”.
Investment Highlights The increase in sales volume in April was + 44%, far exceeding that of the industry (+ 3%). During the optimization of the product structure, the sales volume of Sany Heavy Industry in April was 6,734 units, each time + 10%, leading the industry (+ 7%);Among them, the sales volume of 892 units was large, which was + 44% in the past, far exceeding the 3% growth rate of the industry, and the market share was + 7pct per year.
After Sany launched the H series in July 2018, the market share of excavators above 40 tons has increased significantly. From January to April 2019, Sany ‘s market share has reached 35% (once + 14pct).
We judge that the company’s market share of high-end products will continue to increase, and the optimization of product structure will bring about profit elasticity. At the same time, after the internal competition of CUDA products has significantly improved, overseas growth logic can be realized.
Sany ‘s export sales from January to April were 2,574 units, accounting for 34% of the industry ‘s total exports, and export sales increased by + 39% for ten consecutive years (the industry growth rate was 33%).
Cranes and concrete machines welcome new peaks, and sales are expected to continue to exceed expectations.
From January to March, the growth rate of automobile cranes in the industry reached 71%, the company’s sales volume increased by + 118%, and its market share reached 26% (+ 6pct). The perfect product series can greatly enhance it.
In April, cranes and concrete machines started well and the industry demand was strong. Currently, the remaining output determines the state of sales. The production capacity of Sany cranes has increased by 60-70% compared to 2018, and subsequent sales are expected to continue to exceed expectations.
The heavy repurchase demonstrates significant development confidence, and sends a positive signal. The company issued a repurchase plan on May 7, intending to repurchase A shares issued by the company with its own funds of not less than RMB 8 trillion and not more than 1 billion US dollars.For stocks, the repurchase price does not exceed 14 yuan / share.
The maximum repurchase fund is RMB 10 billion, and the repurchase price is up to 14 yuan per kilogram. If all the repurchase prices are repurchased at the highest price, the maximum number of repurchased shares is expected to reach 71.43 million shares, accounting for approximately the total issued shares of the company so farThe total value of equity is 0.
The company will convene a shareholders’ meeting to approve the “Repurchase Plan” on the 24th (Friday). If the plan is approved, the company will implement the repurchase within 3 months of reorganization, which will demonstrate its confidence in development.
70% of the repurchased shares will be used for employee stock ownership plans and 30% will be used for equity incentives, which will promote the company’s long-term stable development.
The company is currently estimated to be close to the bottom area, and this repurchase is expected to release positive signals.
The prosperity of the industry will continue, and cranes will grow excessively.
As the industry leader, the company’s excavator performance has been among the world’s first echelon with Carter, and the quality of service is obviously different from other brands. Since 2019, the proportion of cities in various fields such as large, medium and small digging, cranes, etc. has achieved unexpected growth.It also continued to grow at a high rate.
Optimization of high-end 深圳桑拿网 product structure + scale effect + high export growth will continue to bring performance flexibility to the company, and global competitiveness will gradually bring premiums. We continue to be optimistic about the company’s double-click opportunities.
Profit forecast and investment grade: We continue to be optimistic about the industry category of Sany as a leader in construction machinery: first, the competitive advantage of the full range of product lines, and the concentration of the leader continues to increase; second, exports continue to exceed expectations, and the global layout is the most complete;Industry leaders estimate the premium; fourth, operating quality and cash flow continue to improve.
We estimate that the company’s net profit in 2019-21 will be 10.1 billion, 11.5 billion, and 12.5 billion, corresponding 南京夜网 to PE, 10, 8, and 8 times, respectively, giving a “buy” rating.
We give a target valuation of 15 times PE, corresponding to a market value of 151.5 billion yuan and a target price of 18 yuan.
Risk warning: The actual growth rate of downstream infrastructure is higher than expected, and the intensified competition in the industry has led to a decline in profitability.